Which of the Following Causes an Increase in Demand for a Normal

question 270

Multiple Choice

Which of the following causes an increase in demand for a normal good?

• A) Increase in the price of a substitute
• B) Increase in the price of a complement
• C) Decrease in price
• D) Decrease in income

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Definitions:

Profit-Maximizing

The process or strategy of adjusting production and pricing to achieve the highest possible profit.

Socially Optimal Price

The price of a product that results in the most efficient allocation of an economy's resources and that is equal to the marginal cost of the product.

Marginal Cost

The expenses associated with creating an extra unit of a good or service.

Natural Monopoly

A market condition where the most efficient scale of production is achieved when a single firm supplies the entire market due to high fixed or start-up costs.